3 Lifestyle Questions You MUST Ask About Your Financial Advisor
These three lifestyle questions can reveal if your financial advisor cares more about their fees than you.
#1: Does Your Financial Advisor Communicate with You in Your Preferred Style?
You provide a lot of personal information to your financial advisor (FA). In turn, your FA should provide you with an even greater amount. Most importantly, your FA should communicate that information and their advice to you in a way that you understand.
Your FA should custom tailor their communication style to match yours. You should not need to change your style to match theirs.
You owe it to yourself to figure out if your FA is willing, or even capable of communicating with you in your preferred style.
Here are some ways you may prefer to take in information. Is your FA capable of communicating in these ways?
Using Creativity
- Explaining with analogies, metaphors and similes
- Visualizing the future
- Walking in another’s shoes
Seeing
- Picture “road maps”
- Flow charts
- Decision trees
Watching
- Webinars
- YouTube videos
- Online courses
Hearing
- Storytelling
- Experiences of others
- Case studies
Listening
- Podcasts
- Audio books
- Discussions
Reading
- Short articles
- Detailed research articles
- Books
Numerical
- Spreadsheets
- Graphs
- Step-by-Step Calculations
Just as important, has your FA asked you what ways you don’t like? Moreover, have you told them, but they still try to communicate with you in ways you don’t like?
There may be times when you should consider finding a financial advisor who is willing to communicate with you in your style. Perhaps consider finding a financial advisor who is a better fit for you and your style.
#2: Does Your Financial Advisor Try to Understand Your Values?
Our core values shape how we think and feel. They guide us in making decisions and taking action.
Does your FA ask you about your core values? Do they listen and pay close attention to what’s most important in your life?
Here are values often thought of as being core:
Here are 100+ more values to consider.
#3 Has Your Financial Advisor Offered to Help You to Write a “Life Purpose Statement?
Your Life Purpose Statement is your personal expression of what is most important and meaningful in your life. It can help you align your financial decisions and actions with your core values and life intentions.
We all need a reason to get out of bed each morning. A financial advisor who can help you write your Life Purpose Statement could help you gain clarity and confidence in making financial and life decisions
Personal finance is financial. More importantly, it’s personal. Your financial advisor should custom tailor their service to you as the unique person you are, with your own particular communications style, core values, and life purpose.
Also read, Resolve for the New Year: Take 3 Steps Today to Get Your Money’s Worth from Your Financial Advisor.
Let’s Have a Conversation:
Have you experienced communications mismatches with your financial advisor? How have you managed the mismatches? Have you created a life purpose statement?
When choosing a financial advisor make sure they are a fiduciary. They are bound to act in your best interest.
Hi Delta,
Excellent idea to choose a financial advisor who identifies as a fiduciary.
Two additional thoughts.
#1-make sure your potential financial advisor fiduciary shows the inclination and capability of understanding your communication style, your values and your life purpose.
After all, how can a financial advisor, even a fiduciary, effectively act in your best interest, if they don’t take the time, or are not capable of understanding you as a person, and knowing what your best interests are?
#2-the term “fiduciary” can often be used simply as a marketing tool.
Take an extra step and ask the potential financial advisor fiduciary to send you an email saying that they would be willing to provide you written explanations of potential conflicts of interest whenever they might arise.
These written explanations should be in understandable language, not legalese.
For example, if a financial advisor recommends you simplify your financial life and consolidate your various accounts into one account at their firm, you should ask them to provide you a written explanation of the potential conflicts of interests in that recommendation.
Having these explanations in writing encourages both you and the potential financial advisor fiduciary to be focused and accountable to you for receiving advice that is indeed in your best interest.
Thank you for your excellent idea.
I have recently had 2 bad experiences with financial advisors. (I inherited some money last year).
The first wanted me to open a bank account with a different company from my current bank, change stockbrokers AND change super fund, all which had higher fees.
(My current super fund is one of the top performers).
And I am happy with my stock broker–I don’t play the stock market; I am a small-time investor.
I thought: surely he must be getting kick-backs from these companies?
The second, while being of some help tax-wise, wanted me to open bank & stock broker accounts to which they had access!
Have I been living under a rock?
Both are reputable advisors.
Supposedly.
I have since sifted out the helpful advice & used that. Fortunately I had not committed to any ongoing contracts for which they wanted to charge me way over what I would have gained from using that advice.
Be very careful.
Hi Jen,
I’m sorry you had several bad experiences with your financial advisors.
Glad you had the presence of mind to reject the financial advisors who want to control your assets and charge you high fees.
Perhaps you might avoid future bad experiences by looking for “Advice-Only” financial advisors.
Advice-Only financial advisors provide financial planning advice (including investment advice) but do not control or manage your money.
They get paid by you strictly for the financial planning ideas (including investment ideas) they provide you, not by controlling your assets.
They usually offer services for a flat-fee or on an hourly basis.
Advice-Only financial advisors generally can be more balanced and objective in their advice to you because their compensation incentive is directly linked to how useful and valuable their ideas are to you.
Advice-Only objectivity would be in contrast to financial advisors who compensation incentives are directly tied to moving your accounts into their control in order to collect their assets under management (AUM) fees.
Thank you for reminding us to be very careful.
Although I have a financial planner I am not sure they measure to your very interesting standards. Perhaps I should share this article with them- I have two Certified Financial Planners that work together and it is a fairly new relationship for me.
Thank you for sharing with us your experience and thoughts.
Yes, please share this article.
In doing so, hopefully you, and others may:
Thanks again!